Saturday, March 5, 2016

An Unappreciated Cause

Writing for Bloomberg View, Justin Fox examines the various factors responsible for the lower-than-pre-recession work force participation rates for people 16 and older. He correctly notes some number of these at the extremes of the age distribution are in school or retired. Fox also blames robotics and foreign workers, either here as illegal immigrants or doing the work in their home countries as jobs are sent abroad.

Like most analysts, Fox downplays the very large number of people who, during the Great Recession, truly could not find work. They perforce had to discover ways to survive without a formal job. Once people learn how to survive without a formal job - through disability, welfare, the underground economy or whatever - they rarely return to the formal workplace.

Woody Allen famously said, "Eighty percent of success is showing up." Out of the formal workforce for a year or more, people lose the habit or discipline of showing up. Far too often they never regain it.

Think of the higher rate of workforce non participation as being therefore, in substantial part, a lingering symptom of the Great Recession. It may dissipate gradually as the affected people age and die, or it may persist as those people serve as perverse role models for others in difficulty.